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Count the top forecaster at the nation’s biggest real estate trade group among the optimists when analyzing the looming 2023 housing market.
National Association of Realtors Chief Economist Lawrence Yun told a webinar Tuesday that he and his team believe America’s median home sale price will be stable next year, dropping a mere 0.3 percent year-over-year and total sales of existing homes will slip by only 6.8 percent.
Those compare to a likely 9.6 percent year-over-year gain in home prices, a 16.2 percent drop in transactions and a 6 percent slip in the dollar volume of home sales.
His predictions follow much more pessimistic takes by others in the housing industry like John Burns Real Estate Consulting, but echo divination by economics teams at Zillow, Fannie Mae and Freddie Mac.
Come 2024, Yun said, the market will come roaring back with a 15 percent increase in the dollar volume of sales, a 10 percent increase in the numbers of sales and a 5 percent increase in the median home price.
Still, Yun cautioned, the second quarter of next year will likely see a more significant dip in home prices, and different regions of America could see wildly different results.
“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10 to 15 percent.”
Yun pushed back on predictions from some quarters of a housing crash on par with the 2008 financial crisis, citing the still-strong labor market, “virtually no” subprime loans on the market and a 3 million-unit shortfall in housing production between this housing market cycle and the last one that’s cut inventory on the market by around 75 percent.
The NAR economist picked a range of Sun Belt and Southern metro areas as housing markets to watch in 2023:
- Atlanta-Sandy Springs-Marietta, Georgia
- Raleigh, North Carolina
- Dallas-Fort Worth-Arlington, Texas
- Fayetteville-Springdale-Rogers, Arkansas-Missouri
- Greenville-Anderson-Mauldin, South Carolina
- Charleston-North Charleston, South Carolina
- Huntsville, Alabama
- Jacksonville, Florida
- San Antonio-New Braunfels, Texas
- Knoxville, Tennessee
A panel of housing economists speaking after Yun’s presentation rattled off a list of “wild cards” that could alter his and their own forecasts.
Realtor.com Chief Economist Danielle Hale said inflation’s trajectory – a prominent driver of mortgage rates – and economic growth could pull the market in a different direction.
National Association of Home Builders Assistant Vice President Danushka Nanayakkara-Skillington said more aggressive interest rate increases by the Federal Reserve could cool the economy so far that housing would slump even more.
Bright MLS Chief Economist Lisa Strutevant said she was concerned the country could be talking itself into a recession.
“People are running up all kinds of consumer debt. Savings rates are down,” she said. “Will consumers look up and say, ‘Wait a minute, I still want to spend. I’m still coming off this pandemic malaise but I need to rethink big decisions like purchasing a house.'”
Selma Hepp, interim chief economist for CoreLogic, said she was keeping an eye on Russia’s invasion of Ukraine, and its impact on the global economy.
